Income Tax for Senior Citizens

A senior citizen is an individual resident (man or woman) who is 60 years old or more but below 80 years as on the last day of the previous year (born on or after April 1st, 1935 and before April 1st, 1955). Senior citizens source of income include pension, rental income, interest on savings, fixed deposits, senior citizen saving scheme, reverse mortgage and post office scheme. According to a Central Board of Direct Taxes directive, cases of senior citizens cannot be scrutinized unless an assessment is necessary on the basis of credible information.

Union Budget 2018-19- Tax Exemptions/Deductions for Senior Citizens

The Union Budget announced on 1st February 2018 by Arun Jaitley, has brought three vital provisions for tax deductions to enable the senior citizens of the country lead a prosperous and dignified life. Since health is a vital area of concern for aged people due to the frequent unexpected illnesses they are prone to and the high cost incurred on medical expenses as such, the government has offered the following tax benefits for the senior people:

Senior persons aged between 60-80 years can claim tax deductions of up to Rs.50, 000 on health insurance and medical expenses under section 80D. To offer this tax benefit to aged people, the limit of deduction has been raised from Rs.30, 000 to Rs.50, 000 in the new budget. Due to the introduction of this new rule, each and every senior citizen of India can now take benefit of up to Rs.50,000 tax deduction every year for any general medical expenditure or health insurance premium.
The senior citizens are now allowed to claim a tax deduction of Rs.1 lakh for medical expenditure in case of specific critical illnesses. The earlier deduction limits of Rs.60,000 for senior citizens and Rs.80,000 for very senior citizens are increased to Rs.1 lakh by the government this fiscal to offer a better life to the aged people of India.

Income Tax Calculation for Senior Citizens 2017-18

The income tax for senior citizens is calculated based on the basic salary, house rent allowance, fixed allowances, and other sources of income. However, the senior citizen receives higher exemption limit compared to individuals who are below 60 years old. In order to calculate the income tax for a senior citizen, all the income is taken into consideration along with the allowable deductions and the income tax slab for FY 2017 – 2018. There various websites that offer an online income tax calculator. Once you have all the details, you can use the calculator to determine your taxable income.

Income Tax Benefits for Senior Citizens

The senior citizens receive superior benefits when compared to non-senior citizens. The senior citizens are entitled to a deduction of the medical insurance premium for up to Rs.20,000. The senior citizens are also exempted from the payment of advanced tax. There are no deductions of TDS on earned interest. The section 80DDB provided a higher deduction for the ailment of specified diseases. The senior citizens are not required to pay tax for the amount received under Reversed Mortgage Scheme.

Income Tax Filing for Senior Citizens

The senior citizens are required to file their income tax return to claim their tax refund. The following Income Tax Return (ITR) forms are required to be filled by the senior citizens:

ITR I – Individual whose total Income Includes:

Salary or pension
Income from house or property (excluding incidents where loss is brought forward from previous financial years)
Income from the other sources (excluding income from horse racing or winning lottery)

ITR 2 – Individual whose total Income Includes:

Salary or pension
Income from house or property
Capital gains
Income from the other sources (includes winning from horse racing and lottery)
Incidents where the income of another individual, such as spouse or other member has to be combined with the income of the individual

Income Tax Slabs For Senior Citizens for Financial Year 2017 – 2018

Tax applicable for individuals over 60 years and under 80 years

Annual Income	Tax Rates	Education Cess	Secondary and Higher Education Cess
Up to Rs.3,00,000	Nil	Nil	Nil
Rs.3,00,001-Rs.5,00,000	5%	2% of income tax	1% of income tax
Rs.5,00,001-Rs.10,00,000	Rs.10,00 + 20%	2% of income tax	1% of income tax
Above Rs.10,00,000	Rs.1,10,000 + 30%	2% of income tax	1% of income tax

Tax applicable for individuals over 80 years and above

Annual Income	Tax Rates	Education Cess	Secondary and Higher Education Cess
Up to Rs.5,00,000	Nil	Nil	Nil
Rs.5,00,001-Rs.10,00,000	20%	2% of income tax	1% of income tax
Above Rs.10,00,000 Rs.1,12,500	Rs.1,00,000 + 30%	2% of income tax	1% of income tax

Rebate in Income Tax for Senior Citizens

The rebate scheme under Section 87A is applicable for individuals where the total income is not above Rs.5 lakh. A rebate of Rs. 2,000 will be allowable for individuals with an annual income up to Rs.5 lakh. Hence, the payable tax amount will be Rs.23,000. For individuals who have a total income above Rs.5 lakh, the payable tax amount will be Rs.25,000 + 20% tax.

Income Tax Limit for Senior Citizens:

The basic exemption limit for Senior citizens (60 years to below 80 years) is Rs.3 lakhs. Senior citizens can avail of several benefits in terms of interest earned on savings schemes. Most banks provide a higher interest rate to senior citizens compared to the rest. On fixed deposits, tax is deducted at source, thereby, making it a tax-free investment option for senior citizens.

Income Tax for Super Senior Citizens (Above 80 Years):

A super senior citizen is a resident individual (man or woman) who is 80 years old during the previous year (born before April 1st, 1935). The basic exemption limit for very senior citizens (80 years and above) is Rs.3.50 lakhs. Super senior citizens over 80 years can avail of deductions up to Rs.30,000 for their medical expenses from their total income.

The following table shows the income tax slabs and rates applicable for super senior citizens for the assessment year 2015-16 (income earned from April 1st 2014 to March 31st 2015)